Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Shareholder Meeting (October 2010)
27 slides from Australian Foundation Investment's shareholder meeting presentation, Oct 4, 2010
Slide 1: 2010 Annual General Meeting Chairman's Presentation
For personal use only 4 October 2010 The Manager Company Announcements Office Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited 2010 Annual General Meeting Chairman’s Presentation Dear Sir or
Slide 2: Annual General Meeting Presentation
For personal use only Annual General Meeting Presentation
Slide 3: Disclaimer
DISCLAIMER For personal use only Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good fai
Slide 4: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only
Slide 5: Summary of Results
Summary of Results For personal use only FY10 FY09 Key factors: $m $m • Decline in dividends and Income 202.9 218.1 distributions Operating Expenses (11.1) (11.3) • Revenue from deposits Income Tax (8.2) (3.5) down as cash invested Net Operating Profit 179.5 199.6 • Improved performance of Trading P
Slide 6: Earnings Per Share vs. Dividends Per Share
Earnings Per Share vs. Dividends Per Share For personal use only 24.00 22.00 20.00 Cents per share 18.00 16.00 14.00 12.00 23.7 10.00 21.0 21.0 21.2 21.0 20.5 21.0 19.4 18.2 8.00 17.0 6.00 4.00 2.00 0.00 2006 2007 2008 2009 2010 Financial year Earnings per share Dividends per share Note: Earnings pe
Slide 7: The Market Over the Year – All Ordinaries
For personal use only Value Ju l -0 3600 3800 4000 4200 4400 4600 4800 5000 5200 9 A ug -0 9 Se p- 09 O Price Index ct -0 9 N ov -0 9 D ec -0 9 Ja n- 10 Fe b- 10 M ar -1 0 2009/10 financial year A pr -1 0 M ay -1 0 Ju n- 10 Ju l -1 0 A ug -1 0 The Market Over the Year – All Ordinaries Se p- 10
Slide 8: Key Investment Themes Over the Year
Key Investment Themes Over the Year For personal use only Generally adopted a cautious approach in light of the global environment - looked for income yield Opportunities did however arise through: ¾ share placements ¾ market weakness in good companies offering long term value Utilised $83 mil
Slide 9: Largest Acquisitions (Last Financial Year)
Largest 5 Acquisitions (Last Financial Year) For personal use only $m Transurban Group 21.2 Hastings Diversified Utilities Fund 15.6 Oil Search 12.3 Amcor 11.0 Perpetual 10.1
Slide 10: Largest Disposals (Last Financial Year)
Largest Disposals (Last Financial Year) For personal use only $m Santos FUELS (a) 13.2 Nufarm 7.9 (a) Redeemed by the Company
Slide 11: Top Holdings – August 2010
Top 25 Holdings – 31 August 2010 For personal use only % of portfolio (excl. $m cash) * 1 BHP Billiton 528.9 11.6% * 2 Commonwealth Bank of Australia 427.4 9.4% 3 Westpac Banking Corporation 395.7 8.7% 4 Rio Tinto 250.5 5.5% 5 Wesfarmers (a) 242.1 5.3% * 6 National Australia Bank 203.9 4.5% 7 Woolwo
Slide 12: Top Holdings – August 2010 con't.
Top 25 Holdings – 31 August 2010 con’t. For personal use only % of portfolio (excl. $m cash) * 11 Santos 97.3 2.1% 12 Amcor 85.1 1.9% * 13 Oil Search 82.8 1.8% * 14 QBE Insurance Group 80.6 1.8% * 15 Origin Energy 80.0 1.8% 16 Computershare 77.4 1.7% * 17 Transurban Group 76.3 1.7% 18 AGL Energy 64.
Slide 13: Top Holdings – August 2010 con't.
Top 25 Holdings – 31 August 2010 con’t. For personal use only % of portfolio (excl. $m cash) 20 Incitec Pivot 60.9 1.3% 21 Australian Infrastructure Fund 59.4 1.3% * 22 Westfield Group 56.0 1.2% 23 West Australian Newspapers Holdings 54.3 1.2% * 24 AMP 54.3 1.2% * 25 Coca-Cola Amatil 51.0 1.1% Total
Slide 14: BHP Billiton is AFIC's Largest Holding
BHP Billiton is AFIC’s Largest Holding For personal use only ¾ Strong/experienced Management and Board ¾ Generates strong cash flows and has a strong balance sheet ¾ Operates at low end of the cost curve for its projects – able to withstand significant price variations ¾ Attractive and diversified o
Slide 15: The Banking Sector
The Banking Sector For personal use only ¾ Each of the major 4 banks have slightly different strategies ¾ Attractively structured competitive industry ¾ Australia has passed through the worst of the economic cycle which means bank provision levels should decline further – improved risk processes sin
Slide 16: Telstra
Telstra For personal use only ¾ In principle agreement reached with Federal Government about NBN but details and implications for shareholders still unclear ¾ Long lead time for implementation of NBN could create business uncertainty for Telstra for some time ¾ Minority Federal Government means poli
Slide 17: AFIC Annualised Returns – Year Ended August 2010
AFIC Annualised Returns – Year Ended 31 August 2010 For personal use only 14% 12% 11.1% 10% 9.5% 8% 7.3% 7.3% 6% 5.6% 4.2% 4% 3.8% 2.2% 2% 0% -2% -1.5% -4% -3.3% -4.1% -6% -7.0% -8% 1 year return 3 year return 5 year return 10 year return Net Asset per share growth plus dividends Share Price growth
Slide 18: AFIC Annualised Portfolio Returns, Including Franking Credits
AFIC Annualised Portfolio Returns, Including the Benefits of Distributed Franking Credits For personal use only – Year Ended 31 August 2010 14% 12% 11.5% 10% 8.7% 8% 7.4% 5.8% 5.6% 6% 4% 3.4% 2% 0% -2% -2.3% -4% -6% -5.7% -8% 1 year return 3 year return 5 year return 10 year return Net Asset per sha
Slide 19: AFIC Portfolio Return vs. Wholesale Australian Equities Universe
AFIC Portfolio Return to 31 August 2010 vs. Wholesale Australian Equities Universe* For personal use only *Before Tax and After Fees. For AFIC after tax paid and fees
Slide 20: AFIC Share Price Relative to Net Asset Backing
AFIC Share Price Relative to Net Asset Backing* For personal use only 20% Premium 15% 10% 5% 0% -5% -10% -15% * Before provision for capital gains tax Discount -20% Aug-00 Aug-02 Aug-04 Aug-06 Aug-08 Aug-10
Slide 21: Reporting Season – Key Themes
Reporting Season – Key Themes For personal use only Investment team attended presentations by 155 companies: ¾ Current domestic conditions remain patchy with little in the way of outlook comments from companies ¾ Activity levels in Europe and the US remain subdued ¾ China/Asia growth has been import
Slide 22: Reporting Season – Key Themes con't.
Reporting Season – Key Themes con’t. For personal use only ¾ Labour shortages are beginning to re-emerge in WA, raising concerns over wage pressure and project delays ¾ Poor housing affordability has become a more prominent structural issue for many in the property market and building and constructi
Slide 23: Outlook
Outlook For personal use only ¾ Demand for resources/energy from Asia still driving the Australian economy - some sectors are however underperforming ¾ Structure of the Federal Government likely to cause some political uncertainty in the market in the short term ¾ Equity market valuations in Austral
Slide 24: Projected Net Government Debt as a Percent of GDP
For personal use only A % us tr 0.0 20.0 40.0 60.0 80.0 100.0 120.0 C alia a D nad en a m Source: OECD ar Fr k G an er ce m a G ny of GDP in 2011 re e Ir ce el an d Ita Ja ly P pa U or n ni tu te ga d S l K p U in ai ni g n te do d m S E tat u e To ro s ta are lO a E C D Projected Net Government Deb
Slide 25: ASX 200 Industrial Prospective PER – Rolling
For personal use only Au 8 10 12 14 16 18 20 22 g-8 9 Ju n-9 0 Ap r-9 1 Fe b - 92 De c-9 2 Source: GS&PA Research estimates. Oc t -9 3 Au g-9 4 Ju n-9 5 Ap r-9 6 Average: 14.5 Fe b - 97 De c-9 7 Oc t -9 8 12 Months Forward Au g-9 9 Ju n-0 0 Ap Average: 13.9 r-0 1 Fe b - 02 (excl period Oct 98 - Jul
Slide 26: ASX 300 Resources Prospective PER – Rolling
For personal use only Au 6 8 10 12 14 16 18 20 22 24 26 28 g-9 0 Ju n-9 1 Ap r-9 2 Fe b -93 De Source: GS&PA Research estimates. c-9 3 Oc t -9 4 -1 Std Dev Au g-9 5 Ju n-9 6 Ap r-9 7 Fe b -98 De c-9 8 Oc t -9 9 Au g-0 0 Ju n-0 1 Ap r-0 2 Fe b -03 +1 Std Dev De Rolling 12 Months Forward c-0 3 Oc t -0
Slide 27: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Shareholder Meeting (October 2010) on 6ix